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Job applicants to the nation’s banks and financial institutions are less likely to lie on their job applications compared to a year earlier, according to research released today by pre-employment screening firm Powerchex.

The research revealed a turn-around in the trend in applicant fraud. It recorded a 18% drop in major discrepancies on CVs and applications submitted between July 2006 and June 2007 when compared to the same period the previous year. This indicates that more stringent vetting procedures are at last having an effect, not only in catching dishonest applicants, but also in deterring them from being dishonest in the first place.

The research found that younger, more junior people are more likely to have a discrepancy on their CV. Someone in a junior administrative position is 23% more likely to have a discrepancy on their CV than in a managerial role. An applicant aged under 20 is 26% more likely to have a discrepancy than a 51-60 year old.

“This research shows recognition by applicants that misrepresentation on CVs is no longer viable,” said Alexandra Kelly, managing director of Powerchex. “More rigorous vetting procedures are allowing companies to clearly discern an applicant’s past and then make an informed choice about whether that person is right for their organisation.”

In 2006, reports such as BDO Hayward’s Fraudtrack 4 and CIFAD’s (the UK’s Fraud prevention service) The Enemy Within showed a steady increase in CV embellishments. That the trend is now changing is good news for HR departments in the financial services.

Fraudulent applicants who misrepresent their educational qualifications and job experience cost the financial services industry millions of pounds a year,” continues Kelly.

"Banks and financial institutions have a duty to prevent fraudsters from having access to our personal data and it’s good to see progress being made.”

However, Kelly warned that financial institutions may be exposing themselves to potential fraud when hiring temporary workers. She claimed that her firm's research showed that 89% of undisclosed criminal records were found on the CVs of temporary employees.

As the City relies more on temporary staff to deliver its back office and administrative work, the findings are worrying. “Most financial firms have become good at screening their top employees,” according to Alexandra Kelly. “But an army of unchecked workers are potentially inside the nation’s banks and financial institutions. And as our findings show, potential fraudsters are more likely to come in as temps.”

The UK’s financial institutions increasingly rely on temporary workers. It is estimated by the Office of National Statistics (ONS) in March 2007 that up to 176,000 contract personnel work in the financial services. This could cover back office, support and most worryingly, IT staff.

“Computer workers pose the biggest threat," said Kelly. “Their backgrounds should be checked through the same process as anyone else who works in a bank.”

Recent high profile cases of misplaced or stolen personal data have increased the focus on financial companies to take all the necessary steps to prevent fraud. The Financial Services Authority (FSA) states, “there is evidence that organised crime groups deliberately target firms to place staff to commit financial crime, particularly identity theft. Firms must vet staff carefully before confirming their appointment.”